“There’s no need for anybody in the country to hoard essential food supplies”, Donald Trump told the media on Sunday. “You don’t have to buy the quantities because it’s hard to refill the stores”.
Trump had just spoken to Walmart, Whole Foods and Target, among others.
The fact that Trump has to tell Americans to stop hoarding food speaks to just how rapidly the coronavirus situation has escalated in the US. A mere two weeks ago, it was “just the flu”. Now, Americans are buying enough canned goods to last the next decade (and, based on my own anecdotal observations, enough paper towels to last several decades after that).
COVID-19 infections topped 167,000 globally on Monday, while the death toll rose to 6,400. Deaths in Italy jumped 368 on Sunday alone. The Italian government is rushing to pass new stimulus measures. The German region of Bavaria is set to declare a state of emergency.
Airlines are in an absolute tailspin. Capacity is being slashed across the board. As for guidance, well, you can forget about it – consider it withdrawn. CAPA Centre for Aviation (a Sydney-based consultancy) said Monday the epidemic will bankrupt most airlines globally within three months barring government intervention.
The CDC on Sunday evening said all events of 50 or more people in the US should be canceled for the next two months.
Restaurants and bars are closed by decree in New York City, Massachusetts, Ohio, Washington, California and Puerto Rico. Anyone 65 and older in California has been advised to shelter in their homes. Movie theaters and gyms were closed in Los Angeles – restaurants are takeout and delivery only. Massachusetts joined New York City and other school systems in closing educational facilities starting Tuesday.
“The supply crunch in manufacturing, the panic in the financial sector and the collapse in airline travel, hotel stays and leisure activities means we could see a quarterly contraction of the scale reached during the height of the financial crisis, especially with the prospect of some city lockdowns”, ING said Sunday. “We are pencilling in an 8% annualized 2Q20 GDP decline relative to the -4.4% figure experienced in 1Q09 and -8.4% in 4Q08”.
Not to put too fine a point on it, but you can forget about it when it comes to the US economy in Q1 and Q2. It’s over. The US is in a recession. The longest expansion in American history will come to an end. And a dramatic end it will be.
Rabobank’s Michael Every rolled out a particularly colorful (if dour) assessment in a Monday note. “Markets must now accept: this is war”, he said. He added the following:
How else does one react to the slew of international borders being closed; to the slew of school and businesses within said borders being closed; to reports that elderly people may to self-isolate for months in the UK; that the army may be needed to ensure we get food; that companies are being co-opted by governments to fight the virus as now required (“Build ventilators!” “Make virus tests free!”); that there is talk of supply-chains and virus experts attempting to be poached by the US to work solely for them; and, contra-wise, for key virus-related goods being on-shored or even nationalized, even in Germany? How else does one react to the scale of staggering scale and breadth of uncosted fiscal packages being rolled out, even in the US (though this has an end-year sunset clause — if you want to believe that). Governments are going to have to support households, the self-employed AND businesses large and small through this all, or we face a domino-style economic collapse.
Little wonder people are lining up at the grocery to stockpile food – all Trump exhortations and Fed “bazookas” notwithstanding.
See this Axios link regarding impact related to flaws and delays in testing:
https://www.axios.com/coronavirus-outbreak-testing-delays-60a25ce6-f08d-438f-b294-358e0c300d95.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosam&stream=top
If this analysis is correct, there are thousands more active cases than previously thought.
NY Fed confirms the downturn, that was fast.
“Business activity declined in New York State, according to firms responding to the March 2020 Empire State Manufacturing Survey. The headline general business conditions index fell thirty-four points to -21.5, its lowest level since 2009. The new orders index dropped to -9.3, pointing to a decline in orders, and the shipments index fell to -1.7. Delivery times lengthened slightly, and inventories increased. Employment levelled off, and the average workweek declined. Input price increases were little changed, while selling prices increased at a slower pace than last month. Optimism about the six-month outlook fell sharply, with firms less optimistic than they have been since 2009”
As a small gesture wouldn’t you think Tariff Man would consider reducing all the tariffs he put on incoming goods which we know are a tax on US consumers?
No, that would require acknowledging the reality that China is not paying the tariffs. The facade cannot come down yet, there is still a re-election campaign.
” Now, Americans are buying enough canned goods to last the next decade (and, based on my own anecdotal observations, enough paper towels to last several decades after that).”
No shortage of booze anymore! Shutting all the bars and restaurants in my area sent a surge of unwanted spirits into the depleted and pillaged liquor stores.
Whew that was a close one! Crisis over.